WASHINGTON, June 30 /PRNewswire-USNewswire/ -- The G20 Summit in TorontoJune 27th-28th was heavy on promises and lean on concrete action items, notes the Task Force on Financial Integrity and Economic Development. While the G20 expressed a strong desire to "close the development gap," increase transparency, and tackle corruption and money laundering, there was a notable lack of language indicating an understanding of the interconnected nature of these different problems.

"We are disappointed that there was not an acknowledgment of the importance of curtailing illicit financial outflows from developing countries in the official statement," said Global Financial Integrity director Raymond Baker. "The G20 seems intent on increasing official development assistance and pumping money into other lending bodies for development work but the annual loss of $1 trillion a year from developing countries will continue to dwarf development aid and undermine all efforts to foster robust and sustained economic development until corrective action is taken."

Connect the Dots: A Prescription for Curtailing Illicit Outflows

In September 2009 the Task Force prepared a comprehensive policy paper with recommendations for curtailing illicit financial outflows from developing countries based on combating corruption and money laundering, dismantling bank secrecy, and fostering more rigorous reporting by multinational corporations.

Key policy recommendations include:

Country-by-country reporting by multinational corporations of sales, profits, and taxes paid in all jurisdictions of operation;

Reduce abusive transfer pricing, tax evasion;

Require disclosure of the beneficial ownership of companies, and the beneficiaries of trusts and foundations;

Automatic exchange of tax information;

Stronger due diligence requirements on banks, better enforcement of these requirements;

Harmonizing predicate offenses for money laundering.

The measures set forth by the Task Force would directly address several of the G20's key global priorities. Making multinational corporations and banks more transparent would significantly hinder money laundering, tax evasion, and corruption by making it difficult to impossible to launder and hide the proceeds of these illicit activities.

New Actions:

Two notable action items from the official summit statement are the establishment of two working groups tasked with addressing issues of corruption and development.

Statement on Anti-Corruption Working Group:

We agree that corruption threatens the integrity of markets, undermines fair competition, distorts resource allocation, destroys public trust and undermines the rule of law. We call for the ratification and full implementation by all G20 members of the United Nations Convention against Corruption (UNCAC) and encourage others to do the same. We will fully implement the reviews in accordance with the provisions of UNCAC. Building on the progress made since Pittsburgh to address corruption, we agree to establish a Working Group to make comprehensive recommendations for consideration by Leaders in Korea on how the G20 could continue to make practical and valuable contributions to international efforts to combat corruption and lead by example, in key areas that include, but are not limited to, adopting and enforcing strong and effective anti-bribery rules, fighting corruption in the public and private sectors, preventing access of corrupt persons to global financial systems, cooperation in visa denial, extradition and asset recovery, and protecting whistleblowers who stand-up against corruption.

Development Issues Working Group:

Narrowing the development gap and reducing poverty are integral to our broader objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy for all. In this regard, we agree to establish a Working Group on Development and mandate it to elaborate, consistent with the G20's focus on measures to promote economic growth and resilience, a development agenda and multi-year action plans to be adopted at the Seoul Summit.

Some notable language on money laundering and tackling tax havens in the G20 statement center around the delegation of monitoring and regulatory action to the Financial Action Task Force (FATF):

We fully support the work of the Financial Action Task Force (FATF) and FATF-Style Regional Bodies in their fight against money laundering and terrorist financing and regular updates of a public list on jurisdictions with strategic deficiencies. We also encourage the FATF to continue monitoring and enhancing global compliance with the anti-money laundering and counter-terrorism financing international standards.

We agreed to consider measures and mechanisms to address non-cooperative jurisdictions based on comprehensive, consistent and transparent assessment, and encourage adherence, including by providing technical support, with the support of the international financial institutions (IFIs).

We fully support the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and welcomed progress on their peer review process, and the development of a multilateral mechanism for information exchange which will be open to all interested countries. Since our meeting in London in April 2009, the number of signed tax information agreements has increased by almost 500. We encourage the Global Forum to report to Leaders by November 2011 on progress countries have made in addressing the legal framework required to achieve an effective exchange of information. We also welcome progress on the Stolen Asset Recovery Program, and support its efforts to monitor progress to recover the proceeds of corruption. We stand ready to use countermeasures against tax havens.

The Task Force is heartened to see that the G20 continues to prioritize economic development as part of its broader work restructuring the global financial system. But the official statement from Toronto reveals a continued failure to grasp key linkages between financial opacity in the global financial system and illicit financial outflows from developing countries.

The Task Force hopes that the policy recommendations to be presented by the new Working Groups on development and anti-corruption measures in Seoul reflect this interconnectivity and incorporate elements of the Task Force prescription.

The Task Force on Financial Integrity and Economic Development is a consortium of governments and research and advocacy organizations focused on achieving greater transparency in the global financial system for the benefit of developing countries.